How Does A $150m Business Almost Go Bankrupt? Quickly…
Most people would be excited to own and run a $150m business. Most people would consider themselves successful with a $150 business. But businesses with thin margins are vulnerable to fluctuations of any kind and for Howard Mann, the fluctuation came in the form of a recession.
In the latest episode of It’s Not Over, I talk with Howard Mann, who was the CEO and founder of a logistics business in the late ’90s and into the early 2000s. He has been a business turnaround expert since selling this business and has helped hundreds of entrepreneurs find stability, scale their business and thrive.
Some key lessons from Mann’s story and experience:
You cannot be everything to everyone
Mann realised that to survive the strain of small margins and a shrinking economy he would have to niche down and focus on a core customer who needed exactly what his company specialised in. Prior to this decision, his sales team received a massive book of importers when they joined his company and were told to contact anyone they could. Once the decision was made to focus the sales team became snipers, not foot soldiers and went for key clients that fit a specific mould.
Profit over revenue
Most entrepreneurs believe that bigger is better and this is true with the correct context. Bigger is better if we’re talking about profit. Bigger is not necessarily better if we’re talking about top-line revenue, staff count, leases and rent owed and other expenses that eat into your margins.
In difficult macro-economic times, it’s impossible to defend tiny margins so when times are good find ways to increase your margins.
Don’t let ego and pride drive decisions
While Mann was working with a business turn-around expert he was reluctant to close down offices that were loss-making for fear of what other people would think and how his peers would respond to the shrinking size of his business.
Once his sales team was focused and the business was heading in the right direction it became clear to Mann that the 80/20 rule was at work in his business. 80% of his profit was coming from 20% of his offices.
As one of my mentor’s once told me: if you are thinking about cutting expenses, cut quickly and cut deeply.
What kind of life is your business giving you?
Entrepreneurs will often think about what parts of their life they can dedicate to their business but Mann believes that thinking inversely is a more sane way to build businesses. We should be asking ourselves what kind of life this particular business can provide us. One that forces late nights and early mornings? A life with high stress and low profit? Don’t let your business dictate your life.
Every Tuesday at 7 am you can expect a new episode of It’s Not Over.